Not So Yum! Waffle Tacos Can't Stem Bleeding At KFC, Pizza Hut

Yum!, the parent company of KFC, Pizza Hut, and Taco Bell, reported disappointing second quarter earnings results on Wednesday. Yum! registered only $3.2 billion in sales, under the $3.26 billion analysts expected. It also just missed on earnings per share, reporting $0.73 against a $0.74 estimate.

Those top line numbers were better than last year, as worldwide sales grew 6% and operating profit increased 34%, but Wall Street expected even more improvement from Yum!'s 2013 slump. Shares fell about 2.5% in after hours trading.

As always, Yum! was propped up by the company's massive business in China. Same store sales in the region grew 15% and the margin at restaurants increased 6.2 percentage points to 16.8%. 104 new stores were opened there. Chinese business accounted for more than half of Yum!'s total sales.

"We are especially pleased with the initial success of our KFC Menu Revamp and excited about our plans balance of year," CEO David Novak said in a statement. "Overall, we remain on track to open at least 700 new restaurants in China as we further capitalize on the world’s largest and fastest growing consuming class."

But back in the US, the Yum! brands continue to struggle. KFC same store sales declined 2%, and Pizza Hut declined 4% from a year ago. Taco Bell was the only bright spot back in Yum!'s home country. Adding breakfast (in the somewhat baffling form of Waffle Tacos) helped prop up US same store sales at 2% -- although Taco Bell restaurant margins fell.

"At Pizza Hut, although second-quarter results were disappointing, we are taking significant actions in our U.S. business to reignite sales and expect to make substantial progress balance of year," Novak said.

In a phone interview, Yum! Chief Public Affairs Officer Jonathan Blum told FORBES that while Pizza Hut sales were "clearly disappointing," specific changes to address that would be announced on Thursday morning's conference call with investors.

Brian Solomon was a Forbes staff writer from 2011 to 2017 covering technology, entrepreneurs, billionaires, and more. Follow him on Twitter, Facebook and LinkedIn.

Brian Solomon was a Forbes staff writer from 2011 to 2017. He most recently covered technology startups, with a special focus on the on-demand economy of Uber, Airbnb, and more. Previously at Forbes he wrote about everything from small business to billionaires to Wall Stre...